The government has handed out sops worth Rs 1,700 crore to boost exports. Of this, Rs 900 crore is targeted at specific sectors like textiles and tractors, and regions like Latin America and Africa. The rest of the money will provide cheaper credit for exporters. With exports growing around 37%, why does the government need to pour taxpayers' money into sops?
Commerce minister Anand Sharma argues that the money is necessary to buck the slowdown in exports. Exports grew 81% in July and subsequently fell to sub-40% levels, but it is impossible to sustain export growth at such high levels, with or without subsidies and cheap credit.
The US and the eurozone, which even now constitute 30% of India's export destination, are in an economic mess and are unlikely to recover soon. It is important for Indian companies to seek and develop new markets that have not been dented by the crisis in the West.
Many Indian companies have become globally competitive and can hold their own against rivals anywhere, a far cry from the initial days after reforms when they had to be cajoled with subsidies and schemes to look beyond our borders.
Instead of shovelling out sops, the commerce ministry should cooperate with other, infrastructure-building departments to develop our trade links further. Even now, the average speed of a truck carrying goods across the country is about 15 km per hour, the pace of a committed jogger.
Even with the entry of private players, the port infrastructure is creaky and turnaround time for cargo vessels unduly long. A better way to spend Rs 1,700 crore would be to put the money in a pool to finance trade infrastructure. India has long talked about building overland routes connecting east and north-east India through Myanmar with China and Thailand and beyond. It is time to start building those roads and highways.
Once they kick off, these projects will generate jobs and incomes within the country and make it cheaper and easier to ship stuff overseas. It is time for ministers to step out of dirigistic, hidebound ways of thinking and adopt policies more in tune with the 21st century.
Source : economictimes.indiatimes.com